Oil industry faces policy changes, slumping prices

HOUSTON (AP) - One of the oil industry's biggest challenges this year will be managing exploration and production amid the worst global recession in a generation.

They'll be trying not to scale back so much that it sets the stage for another round of painful price spikes. At the same time, industry leaders will certainly want a say as President Barack Obama shapes the nation's energy policy and looks to reduce America's dependence on fossil fuels.

Some of the energy sector's heaviest hitters meet in Houston this week at an annual conference organized by the consulting firm Cambridge Energy Research Associates. CERA is chaired by author and economic researcher Daniel Yergin.

The list of scheduled speakers includes the top executives of European oil giants BP and Royal Dutch Shell and Saudi oil minister Ali al-Naimi.

The five-day conference begins today, one week after many oil and gas companies reported their worst quarterly earnings in years.

Crude oil's 60 percent price drop in the final three months of 2008 weighed on those earnings as oil continues to hover near five-year lows around $40 a barrel.

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